The silver price continues to trade near $56.95. Silver has gained almost 1.85% for the day so far. Price action is still located close to a crucial support region at $54.20, where price action had already attracted buyers.
Boz noted that silver is close to a decision-making point of movement this week. From his charts, silver is found very near the lower support channel, while the gold-silver ratio is about to test an interesting resistance zone.
Silver Price Holds Lower Channel Support
Silver trades within a broad descending channel that has held price action since February. Various recovery attempts began from close to the bottom of the descending channel.
Price recently hit the channel floor at $54.20. It has rallied higher from there, but price action still holds the lower bound of the trend line. This horizontal support can also be viewed on the chart.
The daily RSI index is seen hovering at 38.14 levels with the signal line at 37.08 levels. The index remained below 50, which denotes the loss of positive momentum from silver, but both RSI lines have just managed to cross each other. Thus, the pressure of selling has come down close to the support level.
Further, silver has been trading below the 200-day moving average, which is seen at $69.73. Silver needs to break a couple of key resistances for a stronger up move to begin. The nearest resistance is placed at the $59-$60 area, where several previous rallies have failed. A sustained move above $59-$60 may open the gates for the $63.30 resistance.
MCO Global identified the $63.30 level as the potential inflection point that would indicate the end of silver’s correction phase. A break of this level could signal that silver’s recent bottom has been set. Above $63.30, silver may continue its rally to the channel median line, which can be found at around $66.
The 200-day moving average at around $69-$70 will be the next major obstacle. Boz’s forecast charts indicate a move toward the region between $68-$70 that combines a rising trendline from the May low, a falling channel median line, and a long-term 200-day moving average.
Silver Downside Risk Remains Near $52
The falling trendline connecting the May high and the June high is yet to be broken by silver. If price does not succeed in doing so and reverses back at the nearest resistance, then silver may fall back to $54.20. A close below this level daily would expose lower targets identified by MCO Global.
According to MCO Global, silver prices may eventually decline toward $52-$49 levels, which they identified as the possible ending for wave four of correction. Fibonacci ratio levels show support at $52.54. Additional supports were seen near $48.88 and $46.41 levels.
Thus, either the price holds the $54.20 level, keeping the bullish recovery hope alive, or it fails that level, and the broader downtrend continues. A move above $63.30 may change the near-term structural dynamics.
Gold Silver Ratio Reaches the 72.62 Barrier
The gold-silver ratio traded close to 70.57 at the close of the previous session and has fallen by almost 1.72%. The ratio has lately approached the 72.62 barrier of resistance. When the ratio goes up, it shows gold is outperforming silver, and if the ratio moves lower, silver is winning the value against gold.
Boz’s chart indicates that the gold-silver ratio has been on a rebound since reaching the lowest level at 52.89 in May. The price has broken through various falling trendlines and created higher highs since the beginning of summer. An ascending support line can be traced between May and July lows.
This ascending line could hold, and the ratio might challenge 72.62 again. However, the previous day’s candle was a bearish one, indicating resistance at the 72.62 level.
RSI has retraced down from its highs and stands at 63.10 with the signal line at 64.27 levels. A sustained rally and close above 72.62 would likely extend the gold-silver ratio toward the 74.20 resistance level, which would keep gold’s bullish tendency against silver up.
If the ratio falters near 72.62, it could find support near the 69-68 levels and subsequently may move toward the 200-day moving average near $65.21. A declining gold-silver ratio along with silver price support near $54.20 would favor Boz’s outlook, whereas a breakthrough in the gold-silver ratio to above 72.62 might boost fears for another silver slide.
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